Starving Real Estate Brokers

Real-estate agents are an optimistic bunch, but it's hard to put a positive spin on the nation's deepening housing bust. In the past year, the average U.S. home has lost 16 percent of its value, and the number of homes changing hands has dropped by one third since the market peak in 2005. Since most agents make money only when houses actually sell (most earn no salary), that's leading to a sense of desperation in some hard-hit regions. In one Los Angeles-area brokerage office, an agent told NEWSWEEK, the outlook is so bad they've even set up a food pantry with pasta and canned goods so struggling agents won't go hungry.

Consider the scene at Prudential California Realty in Cypress, a community in well-heeled Orange County. Manager Christine McGowan says she's watched a number of her employees lose their own homes to foreclosure. Among them is Michael Vasquez, a veteran broker, who lost his—and his marriage—when financial stress contributed to his divorce; he was forced to move in with a friend. He hasn't taken to moonlighting, yet. But colleague Chrysteen Bandy has: she works three hours each evening selling Marriott time-share vacations. "It's been a major struggle for everyone," says McGowan. "I just don't think people fully realize what [agents] are going through."

In Florida, at the center of the housing bust, conditions aren't much better. Jack Meeks, owner of Real Estate Professionals of America, has downsized from 123 agents to 55—and the entire office is selling just 10 homes a month. In some parts of the state, analyst Jack McCabe says, homes are selling at a rate of less than one per year per agent—and nearly a third of sales are foreclosures, which are often done without an agent. "The truth is, [agents] are getting destitute," he says.

Meanwhile, membership in the National Association of Realtors has dipped by just 7 percent since 2006, to 1.3 million. And it's not clear those ranks will fall much further, since many agents sell homes only part time, or rely on a spouse's income to support them through down markets. If nothing else, the current market may help counter the boom-time image that selling houses was an easy ticket to quick riches. The reality is a whole lot tougher.

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